Today we live in a world that just 100 years ago would have been unimaginable. The boundaries and geographical barriers between countries have all but eroded. Go to any major city in the world, head to the airport and in less than 24-hours a person can be in any other major city in the world. This has brought interconnectedness to the global economy with players working in tandem thousands of miles away. But is this a good thing or a back thing? This essay analyzes the phenomenon of globalization and endeavors to determine whether or not the phenomenon of globalization is good or bad.
As with many things in life, it is difficult to apply extreme terms to globalization, which at its heart involves so much complexity that it is really impossible to say it is good or bad. For an American factory worker who has lost his job to a manufacturing plant being relocated to China, globalization would be a bad thing. But, for the companies bottom line it might be a good thing. For the price tag of the end product to the consumer, globalization could be considered a good thing since it saves consumers money. For a worker in China who might not have had a job but now does, albeit an underpaid one, he might say that globalization is a good thing.
The title of business writer Panos Mourdoukouta’s article on globalization in Forbes magazine provides a good way of seeing globalization. His article “The Good, The Bad and The Ugly Side Of Globalization” goes through listing both pros and cons of living in a global economy. Globalization has a good side, but it also has a bad side, it all depends on from where you are standing.
Efficiencies and opportunities are at the heart of the dynamic advantage that globalization gives the worldwide business community. Mourdoukouta writes that “Business can communicate efficiently and effectively with their partners, suppliers, and costumers and manage better their supplies, inventories, and distribution network” (Mourdoukouta, 2011). The writer uses an example of the Sony Corporation, which can sell its electronics and game consoles just as easily in New York as in Tokyo. An American company, Apple, likewise has the leeway to sell its products with relative ease throughout the world, making it one of the most profitable and valuable companies in the world.
Globalization also lets people and companies get easier access to credit and money flows across local and national borders. This leads to gains in income and employment.
But all this does come with a big downside. It creates an interconnected market, which means that when things go sour in one part of the world, it tends to be magnified, and those problems spread elsewhere. In a lot of ways, Europe’s current financial problems might not have affected the financial world as much as it did had not various countries economies not been so interconnected.
It also leads to an intensification of competition, which leads to a “high degree of imitation, price and profit swings, and business and product destruction” (Mourdoukouta, 2011).
2000-2010 can be marked as a decade of intense globalization with 5.7 million manufacturing jobs moving out of the United States (Samuelson, 2012). In the title of his article in the Washington post, Robert J. Samuelson asks the question, “Can globalization survive 2013?” He points out that people are now enjoying a good side of globalization, but that that does not mean that the good times need continue and are subject to cycles of bad times that might shift markets and bring many jobs back to their original place of origin. Apple, responding somewhat to a PR crisis over factory conditions in China, which brought to the public dialogue that not a single product was being produced in the United States, and that Apple was also moving money abroad to avoid paying US taxes, is investing $100 million to return some of the manufacturing of Mac computers back to the US.
Samuelson says that this is not an isolated phenomenon, but one that reflects a trend. General Electric has also brought some of the jobs it sent overseas back home. While this move away from globalization might be good for people in the US who will get jobs out of the deal, it is certainly damaging to people in China who will be out of the job as a result. Samuelsson cites a Boston Consulting Group estimate that between 2.5 and 5 million factory jobs will return to the US economy by 2010.
Today, trade is as free as it has ever been with many of the traditional barriers removed for mutually beneficial advantages in trading countries economies, but this system also sets itself up for potential problems should the current chumminess between countries disappear. The 1930s saw this, when raising trade barriers caused trade wars that created a vicious cycle of employment and income regressions. It is not out of the question that a similar thing could repeat itself in the future.
The last four years have seen a “bad” side to globalization, and could cause one to say that globalization, as a whole is a bad thing. David Smick, an editor for the International Economy magazine sees globalization as an intrinsically bad thing, calling it “the proverbial goose that laid the golden eggs.” He believes that a continual search for larger markets at lower cost which moves investment, trade, jobs and economic growth around the world eventually evaporates options with “no new model to replace it” (Samuelson, 2012).
Smick points out that domestic demand cannot substitute in an economy that relies on global partners. He worries that currency wars could begin since countries will always attempt to gain greater shares of export markets and burst asset bubbles caused by easy money. Many things control globalization, from in boardrooms of companies to national legislatures that pass policies to either help or hinder businesses from moving across borders.
As to answering the question of whether or not globalization is good or bad, the answer is that it depends on who you are asking, where they are standing, what they have at stake, and the current status quo. If a person is inherently averse to taking risks, then a global economy brings with it plenty of preoccupations that would not factor in under a more centralized domestic economy.
Globalization will continue to evolve and will continue to go through good periods and bad periods. Perhaps the only thing that can judge it as good or bad is history that looks back at this time period. No one can say exactly where the world as a whole is headed, and certainly cannot predict how economies in the future will be structured, but only when we’ve seen the result over time can a person say for sure if globalization is good or bad.
Samuelson, R. J. (n.d.). Can globalization survive 2013? - Washington Post.Featured Articles From The Washington Post. Retrieved July 7, 2013, from http://articles.washingtonpost.com/2012-12-30/opinions/36071260_1_production-workers-capital-flows-cost-advantage
The Good, The Bad, And The Ugly Side Of Globalization - Forbes. (n.d.). Information for the World's Business Leaders - Forbes.com. Retrieved July 7, 2013, from http://www.forbes.com/sites/panosmourdoukoutas/2011/09/10/the-good-the-bad-and-the- ugly-side-of-globalization/